Budget battle brewing

By Scott Neufeld - North Shore Outlook - February 28, 2008

The old saying goes that the numbers don’t lie. But in the District of North Van, the budget numbers have been twisted into a dispute between finance staff and one councillor. Responding to comments in an article in last week’s Outlook, chief financial officer Nicole Deveaux says Coun. Doug MacKay-Dunn has it wrong. “He’s getting mixed up,” Deveaux said. MacKay-Dunn is opposed to the way staff are squirreling away money in the district’s reserves. Last week he told The Outlook staff are doing it on their own without a clear policy from council. “What we have yet to do is develop a policy for how to fund these reserves over time,” Deveaux explained. “Which money will go in is not really relevant to the budget.” Dunn said he’s not mixed up, he’s just a “stickler” for process. “I’ve been called worse in my day,” he said, adding council and staff didn’t follow a proper process in dismantling the Heritage Fund. “We’ll just see who’s mixed up.” These comments are just the latest salvos in a debate that’s been raging since last December. What touched off the disagreement was Deveaux’s recommendation that the two-decades-old Heritage Fund be sliced into three pieces. A $4 million slice would be dropped into a fund for new capital projects, a $5.5 million portion would be slipped into a fund to replace infrastructure and another $6 million would go into a fund for the buying and selling of district land. A further $6.5 million of “uncommitted capital” would be deposited into the infrastructure replacement fund. While council approved splitting up the fund (with MacKay-Dunn opposed) no policy was passed to determine the source of this uncommitted funding, said MacKay-Dunn. Now transfers to this fund have popped up in the proposed 2008 budget. “You can’t just tax from the point of view that you want to put it into a slush fund,” he said.

Deveaux argues that the debate is not relevant to the budget because reserves don’t directly affect taxpayers.“You never tax for reserves,” Deveaux said. “This is non-tax revenue for the most part.” Despite this claim, two per cent of the proposed 4.5 per cent tax increase is going straight into the infrastructure replacement reserve. MacKay-Dunn said there should have been public input before $22 million of the public purse was diverted from its original purpose. “This has been an ongoing issue because this is revenue we won’t have going forward,” he said. “Once we do that we have to readjust the budget – to find that revenue we have to raise taxes.” Using the new reserve strategy the district is hoping to stash enough cash to pay for more than $100 million in recreation facility renovations and another $30 million for a North Shore wastewater treatment plant.“In light of these numbers we are so far from over saving,” Deveaux said.

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Don Quixote Note: I posted this story to show the writing talent of Scott Neufeld (Ex editor of Vernon Courier who has turned up at the North Shore Outlook ) and to show that other municipalities and regional districts are building up reserves in a stealth like manner and these methods employed by some finance departments must be exposed to the light of day. Open and transparent debate must be made by responsible councils before unauthorized reserves are built up and the taxpayers must know why they are being taxed.

Budgets are been passed without adequate scrutiny and I will be posting shortly on the reserves that are in the financial plan at NORD for the Multiplex and the Performing Arts Theatre that are projected to reach almost $7 million and $3.5 million respectively by 2017. (If you can't get the taxpayer to allow you to finance a capital project because you must get it by them via counter petition or referendum, then building up reserves via direct stealth taxation is the way to go.) $107,000 of this years tax increase for the Theatre and $145,000 for the Multiplex are budgeted to go into Reserves. Will NORD reopen their budget to debate this policy of Reserves by stealth or are they fully aware of it and think that it is o.k. to blindside the taxpayer?